UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended September 30, 2004
--------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from _______________________ to ______________________
Commission File Number 0-27902
ICON Cash Flow Partners, L.P., Series D
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(Exact name of registrant as specified in its charter)
Delaware 13-3602979
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, New York, New York 10011-1505
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(Address of principal executive offices) (Zip code)
(212) 418-4700
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). [ ] Yes [x] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2004 2003
---- ----
Assets
------
Cash and cash equivalents $ 203,119 $ 44,342
------------ ------------
Investment in finance leases:
Minimum rents receivable 145,764 1,957,988
Unearned income (7,180) (111,491)
Allowance for doubtful accounts (25,000) (26,032)
------------ ------------
113,584 1,820,465
------------ ------------
Investment in operating leases:
Equipment, at cost 3,384,869 3,384,869
Accumulated depreciation (2,374,667) (2,274,667)
------------ -----------
1,010,202 1,110,202
------------ -----------
Due from affiliates 343,172 -
Investment in joint venture 10,122 38,412
Other assets, net 12,525 -
------------ ------------
Total assets $ 1,692,724 $ 3,013,421
============ ============
(continued on next page)
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets - Continued
(Unaudited)
September 30, December 31,
2004 2003
---- ----
Liabilities and Partners' Equity
--------------------------------
Notes payable - recourse $ 1,310,192 $ 1,934,027
Due to affiliates, net - 49,486
Deferred credits and other payables 7,691 8,911
------------ -----------
Total liabilities 1,317,883 1,992,424
------------ -----------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (340,847) (334,386)
Limited Partners (399,118 units outstanding,
$100 per unit original issue price) 715,688 1,355,383
------------ -----------
Total partners' equity 374,841 1,020,997
------------ -----------
Total liabilities and partners' equity $ 1,692,724 $ 3,013,421
============ ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Operations
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenue
Rental income $ 60,000 $ 61,877 $ 160,000 $ 221,229
Finance income 3,531 48,425 103,408 143,540
(Loss) gain on sales of equipment - 116,591 (4,762) 116,939
Loss from investment
in joint venture (34,957) (1,905) (28,290) (9,028)
Interest and other income - - 20,615 21,575
------------- ------------- ------------- ------------
Total revenues 28,574 224,988 250,971 494,255
------------- ------------- ------------ ------------
Expenses
Depreciation 60,000 60,000 100,000 192,458
Interest 37,831 53,290 162,385 160,583
General and administrative 35,303 54,566 138,367 130,404
Provision for bad debts - - 496,375 -
------------- ------------- ------------- -------------
Total expenses 133,134 167,856 897,127 483,445
------------- ------------- ------------- -------------
Net (loss) income $ (104,560) $ 57,132 $ (646,156) $ 10,810
============== ============= ============== =============
Net (loss) income allocable to:
Limited Partners $ (103,514) $ 56,561 $ (639,695) $ 10,702
General Partner (1,046) 571 (6,461) 108
------------- ------------- ------------- -------------
$ (104,560) $ 57,132 $ (646,156) $ 10,810
============= ============= ============= =============
Weighted average number of limited
partnership units outstanding 399,118 399,118 399,118 399,118
============= ============= ============= =============
Net (loss) income per weighted average
limited partnership unit $ (0.26) $ 0.14 $ (1.60) $ 0.03
============= ============= ============= =============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statement of Changes in Partners' Equity
For the Nine Months Ended September 30, 2004
(Unaudited)
Limited General
Partners Partner Total
-------- ------- -----
Balance at
January 1, 2004 $ 1,355,383 $ (334,386) $ 1,020,997
Net loss (639,695) (6,461) (646,156)
-------------- ------------- ---------------
Balance at
September 30, 2004 $ 715,688 $ (340,847) $ 374,841
============== ============= ===============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net (loss) income $ (646,156) $ 10,810
------------ ------------
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Interest expense on recourse financing paid directly
to lenders by lessees 108,802 160,583
Depreciation 100,000 192,458
Amortization of loan fees 41,703 -
Provision for doubtful accounts 496,375 -
Rental income paid directly to lenders by lessees (160,000) (208,664)
Loss from investment in joint venture 28,290 9,028
Loss (gain) on sales of equipment 4,762 (116,939)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 817,442 (51,573)
Other assets - 121,514
Due from/to affiliates (3,895) (87,667)
Deferred credits and other payables (1,681) (148,379)
------------- ------------
Total adjustments 1,431,798 (129,639)
------------- ------------
Net cash provided by (used in) operating activities 785,642 (118,829)
------------- ------------
Cash flows from investing activities:
Proceeds from sales of equipment - 142,303
Cash flows from financing activities:
Repayments of notes payable - recourse (572,637) (96,812)
Other payments - loan fee (54,228) -
-------------- ------------
Net cash used in finance activities (626,865) (96,812)
-------------- ------------
Net increase (decrease) in cash and cash equivalents 158,777 (73,338)
Cash and cash equivalents at beginning of period 44,342 116,095
-------------- ------------
Cash and cash equivalents at end of period $ 203,119 $ 42,757
============== ============
(continued on next page)
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - Continued
For the Nine Months Ended September 30,
(Unaudited)
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
During the nine months ended September 30, 2004 and 2003, non-cash
activities included the following:
2004 2003
---- ----
Rental income from operating
leases paid directly to lender by lessee $ 160,000 $ 208,664
Principal and interest on recourse financing
paid directly to lender by lessee (160,000) (208,664)
---------- ----------
$ - $ -
========== ==========
Interest paid directly to lender by lessee
pursuant to recourse financing $ 108,802 $ 160,583
Other interest paid 53,583 -
---------- ----------
Total interest expense $ 162,385 $ 160,583
========== ==========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2004
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements of ICON Cash Flow
Partners, L.P., Series D (the "Partnership") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC") for Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes included in the
Partnership's 2003 Annual Report on Form 10-K. The results for the interim
period are not necessarily indicative of the results for the full year.
Certain reclassifications have been made to the accompanying consolidated
financial statements at September 30, 2003 to conform to the current
presentation.
2. Organization
The Partnership was formed under the laws of the state of Delaware on
February 21, 1991 for the purpose of acquiring equipment to engage in equipment
leasing and sales activities.
The Partnership's reinvestment period ended June 5, 1997 and the
disposition period began on June 6, 1997. During the disposition period, the
Partnership has and will continue to utilize available cash to pay its
liabilities; distribute substantially all remaining cash, if any, from
operations and equipment sales to the partners; and continue the orderly
termination of its operations and affairs. The Partnership will not invest in
any additional finance or lease transactions during the disposition period.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut Corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment, leases and financing
transactions under the Partnership Agreement.
3. Related Party Transactions
During the periods ended September 30, 2004 and 2003, the Partnership made
no payments of fees or other expenses to the General Partner or its affiliates
pursuant to the General Partner's voluntary decision to waive its right to
management fees and expense reimbursements effective as of July 1, 2000.
During 2004 the Partnership was owed $864,862 due from ICON Cash Flow
Partners, L.P. Seven ("L.P. Seven") relating to a leveraged lease transaction
entered into during 1997. At September 30, 2004, the remaining balance due from
L.P. Seven was $388,763 which the Partnership anticipates receiving in the
fourth quarter of 2004. Additionally, the Partnership owes L.P. Seven $45,491,
at September 30, 2004, for rental payments received by the Partnership on behalf
of L.P. Seven. This amount has been netted against the amount due from
affiliates in the accompanying consolidated balance sheets.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
September 30, 2004
(Unaudited)
4. Investment in Joint Venture
The Partnership and its affiliates, entities in which ICON Capital Corp. is
also the General Partner, formed a joint venture for the purpose of acquiring
and managing various assets. The Partnership and its affiliates have
substantially identical investment objectives and participate on the same terms
and conditions. The Partnership has a right of first refusal to purchase the
equipment, on a pro-rata basis, if any of the affiliates desire to sell their
interest in the equipment.
ICON Receivables 1997-A LLC
The Partnership and three affiliates, ICON Cash Flow Partners, L.P., Series
E ("Series E"), ICON Cash Flow Partners L.P. Six ("L.P. Six") and L.P. Seven
contributed and assigned equipment leases, finance receivables and residuals to
ICON Receivables 1997-A LLC ("1997-A") for the purpose of securitizing their
cash flow collections. At September 30, 2004, the Partnership, Series E, L.P.
Six and L.P. Seven own interests of 17.81%, 31.19%, 31.03% and 19.97%,
respectively, in 1997-A.
At September 30, 2004, 1997-A's operations have been liquidated. Its
remaining receivables totaling $345,152, due from an affiliate of the General
Partner relating to lease receivables, were written-off as uncollectible, and
its remaining cash is being reserved to pay for potential property tax and sales
tax liabilities, if any.
Information as to the unaudited results of operations of 1997-A for the
nine months ended September 30, 2004 and 2003 are summarized below:
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Net loss $ (158,852) $ (50,673)
================== ===================
Partnership's share
of net loss $ (28,290) $ (9,028)
================== ===================
5. US Airways, Inc.
The Partnership's sole significant remaining asset is a de Havilland
DHC-8-102 aircraft (the "Aircraft") which, at September 30, 2004, was on lease
to US Airways, Inc. ("US Airways"). On September 12, 2004, US Airways filed for
bankruptcy protection under Chapter 11 of the United States Bankruptcy Code and
indicated, in October 2004, they would seek to reject the lease at September 30,
2004 and not pay the final rental payment due under the lease in October 2004.
US Airways has made all required payments under the terms of the operating lease
through September 30, 2004. The operating lease with US Airways expired during
October 2004. The Aircraft is held as collateral against a recourse note
payable.
During March 2004 the Partnership amended its recourse note payable related
to the Aircraft and extended the due date until December 2006 with monthly
payments of $45,244. The Partnership utilized $572,637 of the amount received
from L.P. Seven to repay a portion of the recourse note payable. At September
30, 2004 the balance on the recourse note payable was $1,310,192. The recourse
debt allows for the Partnership to make the required monthly payments without a
lessee. The Partnership is currently making the required monthly payments.
Additionally, Management is in discussions with the lender to determine
the possibility of restructuring the recourse debt.
Management is currently reviewing the Partnership's options with respect to
the Aircraft. These options include finding another party to lease the Aircraft
or selling the Aircraft to a third party. Management believes that the current
net book value of the Aircraft, at September 30, 2004, including the anticipated
maintenance upgrade required to continue its air worthiness, is less than the
amount anticipated in a sale or re-lease and, therefore, no impairment is
required at September 30, 2004.
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited consolidated financial statements and
notes included in our annual report on Form 10-K dated December 31, 2003.
Certain statements within this document may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are identified by words such as "anticipate," "believe,"
"estimate," "expects," "intend," "predict" or "project" and similar expressions.
We believe that the expectations reflected in such forward-looking statements
are based on reasonable assumptions. Any such forward-looking statements are
subject to risks and uncertainties and our future results of operations could
differ materially from historical results or current expectations. Some of these
risks are discussed in this report, and include, without limitation,
fluctuations in oil and gas prices; level of fleet additions by competitors and
industry overcapacity; changing customer demands for aircraft; acts of
terrorism; unsettled political conditions, war, civil unrest and governmental
actions; and changes in environmental and labor laws. Our actual results could
differ materially from those anticipated by such forward-looking statements due
to a number of factors, some of which may be beyond our control, including,
without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than our current level of
expenses and debt obligations;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
We are an equipment leasing business formed on February 21, 1991 and began
active operations on September 13, 1991. We were primarily engaged in the
business of acquiring equipment subject to leases and, to a lesser degree,
acquiring ownership rights to items of leased equipment at lease expiration.
We are currently in the final stages of our disposition period, wherein we
are seeking to sell our assets in the ordinary course of business.
Our current equipment portfolio consists of:
o A de Havilland DHC-8-102 aircraft (the "Aircraft") subject to a lease with
US Airways, Inc., ("US Airways") which expired in October 2004. US Airways
filed for bankruptcy on September 12, 2004 and has indicated they will seek
to reject the lease at September 30, 2004 and not pay the October 2004
rent. The cash portion of the purchase price was $3,169,250 and there is
currently $1,310,192 of recourse debt remaining secured by this asset.
o Restaurant and brewing equipment that is subject to a lease with Charlie
and Jake's Bar-B-Q, Inc. with an expiration date of January 14, 2006. At
lease expiration, the lessee will own the equipment. The equipment was
purchased for $274,771, and there is no related debt secured by this asset
at September 30, 2004.
Substantially all of our recurring operating cash flows are generated from
the operations of the Charlie and Jake's Bar-B-Q lease. On a monthly basis, we
deduct the expenses related to the recurring operations of the portfolio from
such revenues and assess the amount of the remaining cash flows that will be
required to fund known re-leasing costs, equipment management costs, and general
and administrative costs.
Industry Factors
Our results continue to be impacted by the continued deterioration of the
air travel industry. The air travel industry is currently experiencing a
recession, and this has resulted in depressed sales prices for assets such as
the Aircraft owned by us.
On September 12, 2004, US Airways filed for bankruptcy under Chapter 11 of
the United States Bankruptcy Code. The operating lease with US Airways expired
during October 2004. US Airways has made all required payments under the terms
of the operating lease through September 30, 2004. However, in October 2004, US
Airways indicated that it would reject the lease at September 30, 2004, return
the Aircraft, and not pay the October 2004 rent. The asset which US Airways
leased from us is our sole significant remaining asset. Management believes that
the current net book value of the Aircraft, which was $1,010,202 at September
30, 2004, including the anticipated maintenance upgrade is less than the amount
we anticipate realizing in a remarketing effort and, therefore, the Aircraft is
not impaired at September 30, 2004.
We are currently reviewing our options with respect to the Aircraft. These
options include finding another party to lease the Aircraft or selling the
Aircraft.
The Aircraft is subject to recourse financing and the lease payments were
remitted directly to the lender to reduce the outstanding loan balance. The
outstanding loan balance at September 30, 2004 was $1,310,192. We believe that
selling the Aircraft would result in proceeds sufficient to cover the debt
balance at September 30, 2004.
The Aircraft is subject to a Federal Aviation Administration required
40,000 hour airframe maintenance overhaul. It was anticipated that the potential
overhaul would not be required for a significant period of time. However, as a
result of a routine records check it was determined that the overhaul could be
required sooner than expected. The Aircraft cannot operate if the maintenance is
not preformed when required. As a result, the economic life of the Aircraft will
be shortened or its residual value diminished.
b. Results of Operations for the three months ended September 30, 2004 and
2003
Revenues for the quarterly periods ended September 30, 2004 and 2003 are
summarized as follows:
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Quarters Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
2004 Quarter 2003 Quarter Change
- --------------------------- ---------------- ------------------ -----------
- --------------------------- ---------------- ------------------ -----------
Total Revenues $ 28,574 $ 224,988 $ (196,414)
- --------------------------- ---------------- ------------------ -----------
- --------------------------- ---------------- ------------------ -----------
Rental income $ 60,000 $ 61,877 $ (1,877)
- --------------------------- ---------------- ------------------ -----------
- --------------------------- ---------------- ------------------ -----------
Finance income $ 3,531 $ 48,425 $ (44,894)
- --------------------------- ---------------- ------------------ -----------
- --------------------------- ---------------- ------------------ -----------
Gain on sale of equipment $ - $ 116.591 $ (116,591)
- --------------------------- ---------------- ------------------ -----------
- --------------------------- ---------------- ------------------ -----------
Loss from joint venture $ (34,957) $ (1,905) $ (33,052)
- --------------------------- ---------------- ------------------ -----------
Total revenues for the three months ended September 30, 2004 (the "2004
Quarter") decreased by $196,414, or 87.3%, as compared to the quarter ended
September 30, 2003 (the "2003 Quarter"). Finance income decreased due to the
maturity of our lease with Federal Express Corporation during the third quarter
2004. Substantially all of our leases have expired and there were no equipment
sales in the 2004 Quarter. The increase in our loss from the joint venture
resulted primarily from matured leases and liquidation of the joint venture's
operations.
Expenses for the quarterly periods ended September 30, 2004 and 2003 are
summarized as follows:
- ---------------------------------------------------------------------------
Quarters Ended, September 30, 2004 and 2003
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2004 Quarter 2003 Quarter Change
- ------------------------------------------- ---------------- --------------
- ------------------------------------------- ---------------- --------------
Expenses $ 133,134 $ 167,856 $ (34,722)
- ------------------------------------------- ---------------- --------------
- ------------------------------------------- ---------------- --------------
Depreciation $ 60,000 $ 60,000 $ -
- ------------------------------------------- ---------------- --------------
- ------------------------------------------- ---------------- --------------
Interest $ 37,831 $ 53,290 $ (15,459)
- ------------------------------------------- ---------------- --------------
- ------------------------------------------- ---------------- --------------
General and Administrative $ 35,303 $ 54,566 $ (19,263)
- ------------------------------------------- ---------------- --------------
Expenses for the 2004 Quarter decreased by $34,722, or 20.7%, as compared
to the 2003 Quarter. The decrease in interest expense is due to a corresponding
decrease in the outstanding debt during the period and the decrease in general
and administrative expense is a result of a decrease in our general operations.
As a result of the foregoing factors, net (loss) income for the 2004
Quarter and 2003 Quarter was $(104,560) and $57,132, respectively. The net
(loss) income per weighted average limited partnership unit outstanding was
$(0.26) and $0.14 for the 2004 Quarter and 2003 Quarter, respectively.
c. Results of Operation for the Nine Months Ended September 30, 2004 and 2003
Revenues for the nine month periods ended September 30, 2004 and 2003 are
summarized as follows:
- ----------------------------------- ---------------------------------------
Nine Months Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
2004 Period 2003 Period Change
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
Total Revenues $ 250,971 $ 494,255 $ (243,284)
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
Rental income $ 160,000 $ 221,229 $ (61,229)
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
Finance income $ 103,408 $ 143,540 $ (40,132)
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
(Loss) gain on sale of
equipment $ (4,762) $ 116,939 $ (121,701)
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
Loss from investment in
joint venture $ (28,290) $ (9,028) $ (19,262)
- -------------------------------------------- ------------------ -----------
- -------------------------------------------- ------------------ -----------
Interest and other income $ 20,615 $ 21,575 $ (960)
- -------------------------------------------- ------------------ -----------
Revenues for the nine months ended September 30, 2004 (the "2004 Period")
decreased $243,284, or 49.2%, compared to the nine months ended September 30,
2003 (the "2003 Period"). The decrease in rental income is due to the maturity
of our lease with Champlain Cable Corp. in the 2003 Quarter. Additionally, we
sold the underlying Champlain Cable Corp. equipment upon maturity of the lease
for which there is no corresponding sale in the 2004 Period. The decrease in
finance income is due to the maturity of our lease with Federal Express
Corporation during the 2004 Quarter. The increase in loss from our joint venture
resulted primarily from matured leases and liquidation of the joint venture's
operations.
Expenses for the nine months ended September 30, 2004 and 2003 are
summarized as follows:
- ---------------------------------------------------------------------------
Nine Months Ended, September 30, 2004 and 2003
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2004 Period 2003 Period 2003 Period
- ------------------------------------------------ ------------- ------------
- ------------------------------------------------ ------------- ------------
Total Expenses $ 897,127 $ 483,445 $ 413,682
- ------------------------------------------------ ------------- ------------
- ------------------------------------------------ ------------- ------------
Depreciation $ 100,000 $ 192,458 $ (92,458)
- ------------------------------------------------ ------------- ------------
- ------------------------------------------------ ------------- ------------
Interest $ 162,385 $ 160,583 $ 1,802
- ------------------------------------------------ ------------- ------------
- ------------------------------------------------ ------------- ------------
General and Administrative $ 138,367 $ 130,404 $ 7,963
- ------------------------------------------------ ------------- ------------
- ------------------------------------------------ ------------- ------------
Provision for bad debts $ 496,375 $ - $ 496,375
- ------------------------------------------------ ------------- ------------
Expenses for the 2004 Period increased $413,682, or 85.6%, compared to the
2003 Period. This increase was offset by a decrease in depreciation expenses due
primarily to the fact that we suspended depreciation in the first quarter of
2004 on the aircraft on lease to US Airways, and the maturity of the Champlain
Cable Corp. lease in 2003 when the underlying equipment was sold. We suspended
depreciation on the aircraft on lease to US Airways, during the first quarter of
2004 based upon an appraisal that valued the aircraft above the then carrying
value. We resumed depreciation during the second quarter of 2004 based on the
potential shortening of the aircraft's economic life. Our increase in bad debt
expense related to a financing receivable from an affiliate that we believe
became a potential collection problem.
As a result of the foregoing factors, net (loss) income for the 2004 Period
and 2003 Period was $(646,156) and $10,810, respectively. The net (loss) income
per weighted average limited partnership unit outstanding was $(1.60) and $0.03
for the 2004 Period and 2003 Period, respectively.
d. Liquidity and Capital Resources
Cash Requirements
Management believes that we have sufficient funds necessary to maintain our
current limited operations. We expect to partially service the debt payment with
Transamerica with proceeds received from the sale of the equipment relating to a
leveraged lease transaction of an affiliate, ICON Cash Flow Partners L.P. Seven
("L.P. Seven"), or the sale or re-lease of the Aircraft. Simultaneously, we have
been in preliminary discussions with the lender, Transamerica Aviation, LLC,
about restructuring the loan in conjunction with a sale or new lease of the
Aircraft.
Sources of Cash
Operations
For the nine months ended September 30, 2004, our primary source of
liquidity was cash collected on the lease with Charlie & Jake's Bar-B-Q, Inc. at
the rate of $7,000 per month. They are currently two months delinquent. They
have claimed hardship resulting from recent hurricanes, but we anticipate they
will pay all amounts due. In addition, we received a total of $864,862, of which
$260,146 was received during the 2004 Quarter, from L.P. Seven relating to a
leveraged lease transaction entered into during 1997. We anticipate receiving an
additional $388,763 from L.P. Seven.
Financings and Recourse Borrowings
Of the $864,862 we received from L.P. Seven, $572,637 was used to repay a
portion of our recourse note payable. We anticipate paying down this debt
further by using the additional monies expected from L.P. Seven. At September
30, 2004 our remaining outstanding balance on the recourse note payable was
$1,310,192. If we decide to sell the Aircraft, we plan to use the proceeds to
repay the recourse note payable. We have begun preliminary discussions with the
lender to further amend the loan agreement.
Distributions
We have not made any distributions to partners since 2001, and we do not
anticipate making any in the future, unless we have any funds remaining after
all assets have been disposed of and all remaining liabilities have been
settled.
Risk Factors and Uncertainties
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make including, but not limited to, the following:
o We may have difficulty remarketing the aircraft. The de Havilland DHC-8
Aircraft is powered by twin-turbo propeller engines and, as such, is being
replaced in the market by the faster, more efficient, regional jets.
Accordingly, we may have difficulty remarketing the Aircraft for an amount
sufficient to satisfy our outstanding loan obligations.
e. Inflation and Interest Rates
Overall, we do not believe that inflation has had a material adverse impact
on our business or operating results during the periods presented. We cannot
give assurance, however, that our business will not be affected by inflation in
the future.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
We are exposed to certain market risks, including changes in interest rates
and the demand for equipment (and the related residuals) owned by us.
We manage our interest rate risk by obtaining fixed rate debt. The fixed
rate debt service obligation streams are generally matched by fixed rate lease
receivable streams generated by our lease investments.
We attempt to manage our exposure to equipment and residual risk by
monitoring the market and maximizing the re-marketing proceeds received through
re-leasing or sale of equipment.
Item 4. Controls and Procedures
We carried out an evaluation, under the supervision and with the participation
of management of ICON Capital Corp., our General Partner, including the Chief
Executive Officer and the Principal Financial and Accounting Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to the
Securities Exchange Act of 1934. Based upon the evaluation, the Chief Executive
Officer and the Principal Financial and Accounting Officer concluded that our
disclosure controls and procedures were effective.
There were no significant changes in our internal control over financial
reporting during our third quarter that have materially affected, or are likely
to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
From time-to-time, in the ordinary course of business, we are involved in
legal actions when necessary to protect or enforce our rights. We are not a
defendant party to any pending litigation and are not aware of any pending or
threatened litigation against us.
Item 6 - Exhibits
32.1 Certification of Chairman and Chief Executive Officer
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON CASH FLOW PARTNERS, L.P., SERIES D
By its General Partner,
ICON Capital Corp.
November 15, 2004 /s/ Thomas W. Martin
- --------------------------- ------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer of
the General Partner of the Partnership)
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P., Series D;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the consolidated financial statements and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: November 15, 2004
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Series D
Exhibit 32.2
Principal Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P., Series D;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the consolidated financial statements and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: November 15, 2004
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer
of the General Partner of the Registrant)
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Series D
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
September 30, 2004
EXHIBIT 33.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the sole General Partner of ICON Cash Flow Partners, L.P., Series
D, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended September 30, 2004
(the "Periodic Report") which this statement accompanies fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners, L.P., Series D.
Dated: November 15, 2004
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
September 30, 2004
EXHIBIT 33.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the sole General Partner of ICON Cash
Flow Partners, L.P., Series D, certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, (18 U.S.C. 1350), that, to the best of my knowledge
and belief:
(1) the Quarterly Report on Form 10-Q for the period ended September 30, 2004
(the "Periodic Report") which this statement accompanies fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners, L.P., Series D.
Dated: November 15, 2004
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D